On Tuesday, Jan. 13, Governor Mike Kehoe delivered the 2026 State of the State Address to the Missouri General Assembly, outlining his legislative priorities and budget for Fiscal Year (FY) 2027.
State of the Budget
The Governor's address centered on delivering a responsible, conservative budget recommendation. As state finances normalize following the influx of unprecedented federal funds and elevated general revenue spending, the Governor's budget starts to align ongoing spending with ongoing revenues in an effort to return state finances to a sustainable, pre-pandemic framework.
"Today, we delivered a budget recommendation that focuses on the core functions of government and how we can best serve Missourians without overpromising and overspending," said Governor Kehoe. "Our recommendation proves that state government can live within its means, and our economy can grow and deliver results for taxpayers all at the same time."
Since Fiscal Year FY2022, more than 3,400 new budgetary items have been added to the state’s operating budget, resulting in nearly $13 billion in new general revenue spending.
Governor Kehoe’s recommendation reduces more than $600 million from the general revenue core operating budget, beginning to address a projected future imbalance exceeding $2 billion. These reductions prioritize fiscal discipline while continuing to meet mandatory and high-priority obligations, including Medicaid matching requirements, child care subsidies, and disaster relief, without cutting core funding for higher education or the K-12 foundation formula.
Income Tax Elimination
While emphasizing smaller government and fiscal discipline, Governor Kehoe highlighted his support for modernizing Missouri's tax code by eliminating Missouri's individual income tax through a responsible, sustainable plan.
"If we are serious about building a foundation for growth, to compete rather than be complacent, then we must begin the work now to phase-out and eliminate Missouri's individual income tax," said Governor Kehoe. "We can do both. We can maintain a balanced budget that supports essential services and pursue a bold tax policy that improves Missouri’s competitiveness."
The first step in this plan is placing the measure before Missourians, so today, Governor Kehoe called on the General Assembly to pass a joint resolution to place a plan for the phased elimination of the individual income tax on the ballot this year. Voter approval would allow legislators to take action on Governor Kehoe's plan next legislative session.
Governor Kehoe previewed the types of modern services that are not currently being taxed that could create new revenue and the safeguards in his plan to ensure fiscal responsibility and protect against economic downturns, including requiring triggered reductions to the income tax rate.
"Eliminating the income tax is not about runaway sales taxes, and I will never support extending sales taxes on agriculture, healthcare, or real estate," Governor Kehoe continued. "Missouri’s tax code was built for the past 100 years. Our economy demands one for the next 100 years."
Kehoe Administration Policy Priorities
In his address, Governor Kehoe highlighted the first year of his administration, emphasizing growth in his four policy priority areas of public safety, economic development, agriculture, and education. Governor Kehoe described his continued focus on these areas, presenting his legislative and budget priorities for this year to the General Assembly.
2026 Legislative & Budget Priorities are viewable at https://governor.mo.gov/media/pdf/governor-mike-kehoe-2026-legislative-budgetary-priorities.
Governor Kehoe also signed four executive orders in conjunction with his address:
• Executive Order 26-01, creating a statewide school accountability A-F grade card
• Executive Order 26-02, demonstrating his administration's commitment to safely and effectively use AI in state government operations
• Executive Order 26-03, reinforcing his administration's commitment to government efficiency, creating the Missouri Government Responsibility, Efficiency, Accountability, and Transformation initiative (Missouri GREAT)
• Executive Order 26-04, establishing the Advanced Nuclear Energy Task Force to promote nuclear energy deployment in Missouri
The Governor's address also featured several special guests, highlighting Missouri's economic development tools, public safety initiatives, the next generation of agriculture, access to education opportunity, and the brave heroes and first responders who answered the call when Missouri was tested.
The FY26/27 Executive Budget will be available at https://budplan.oa.mo.gov/budget-information/fy2027/executive-budget.
